Steady state

Nifty50: 17,397 ▲ 15 (+0.09%)
Sensex: 58,387 ▲ 89 (+0.1%)

Greetings, people!

It’s the end of the week, and if you’re craving some fast food to usher in the weekend, this news is going to leave your taste buds tingling. Mexican chefs have set a new world record by making a 74-metre long torta sandwich that weighs almost 800kg! Don’t know about you, we’re full already!

• After a range-bound session, benchmark indices closed nearly flat, indicating indecision in the markets.
• In all, 28 of the Nifty50 stocks closed in the green.
• The RBI raised the interest rate by 0.5% to control inflation. More on that later.

Among the Nifty sectoral indices, IT (+0.6%) and Bank (+0.4%) saw gains, whereas Auto (-1.0%) and Media (-0.5%) were the top losers.

What’s trending

⭐ HDFC raises funds for affordable housing

HDFC (NSE): 2,353 ▼ 7.8 (-0.3%)

Mortgage lender HDFC has raised $1.1 billion (₹8,700 crore) via external commercial borrowings under the ‘social loan’ facility for financing the affordable housing sector. The loan has been priced competitively at a margin of 0.9%. This is India's largest social financing issuance, and the largest social loan globally.

⭐ Titan posts strong Q1 growth

TITAN (NSE): 2,428 ▲ 4.3 (+0.1%)

Titan reported a 171% year-on-year (YoY) rise in its consolidated revenue to ₹9,443 crore. Meanwhile, its net profit saw a significant rise to ₹790 crore as compared to ₹18 crore in the same quarter last year. The company’s jewellery segment sales were at ₹8,351 crore, up 173% driven by good sales during Akshaya Tritiya. 

⭐ M&M’s profit surges

M&M (NSE): 1,236 ▼ 25 (-1.9%)

Mahindra and Mahindra (M&M) reported a 67% YoY jump in its standalone net profit at ₹1,430 crore, but missed the street estimates. Meanwhile, the company's revenue from operations also rose 67% YoY to ₹19,612 crore. The company recorded its highest-ever quarterly revenue for auto and farm segments at ₹18,995 crore. It also retained the top spot in the SUV segment with 17% market share.

⭐ Welspun’s profit tumbles

WELCORP (NSE): 205 ▼ 15 (-7.0%)

Steel pipe maker Welspun Corp’s net profit declined by over 95% YoY to ₹4 crore. During the quarter, the company's total revenue also fell 12.5% to ₹1,322 crore. Further, the company witnessed a rise in input costs during the period. However, the company has a robust order book valued at ₹13,350 crore.

⭐ Tesla approves stock split

Shareholders of Tesla have given their nod for a 3:1 stock split. The move will benefit smaller investors as it will make the stock more affordable for them. CEO Elon Musk is also planning a factory expansion in the coming months as the company moves towards its goal of making 20 million vehicles per year. At present, Tesla makes 1.5 million vehicles per year.

In Focus

Interest rates rise, again

The Reserve Bank of India (RBI) hiked the key policy rate by 0.5% on Friday. This is the third consecutive rate hike in 2022, which is rather gloomy news for individuals who are planning to take a new home or auto loan or paying existing EMIs. But, why has RBI taken an aggressive approach towards interest rate hike? Let’s take stock.

RBI has hiked interest rates on multiple occasions this year to combat the rising inflation, which stood at 7.01% in July, well-above the central bank’s target range of 2-6%. As a result, the repo rate was revised to 5.4%, which is the rate central bank lends short-term funds to banks and change in this rate typically gets transmitted to the broader banking system.

After the pandemic struck, the central bank had taken an accommodative stance, by reducing interest rates to increase the money supply and support economic growth. However, pandemic-era measures led to high inflationary pressures.

Owing to this, the RBI’s Monetary Policy Committee (MPC) decided to hike rates to reduce liquidity in the economy. In 2022 alone, the central bank has hiked the repo rate by 1.4%. 

After the latest revision in repo rates, the central bank forecasts retail inflation to be at 6.7% in FY23. Meanwhile, the GDP growth forecast was retained at 7.2%.

After the RBI announcement, many banking stocks like ICICI Bank(+2.1%), Kotak Mahindra (+0.9%) were in the green zone. Rising interest rates are positive for banks' profitability.

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Good to know

What is the debt-to-equity ratio?

The debt to equity (D/E) ratio reveals how much of a company’s debt is covered by shareholders’ equity. It is an important financial metric that shows a company’s borrowed funds in relation to its owned funds. It is calculated by dividing total debt by shareholders’ equity. While a normal D/E ratio differs from industry to industry, a lower ratio is generally considered preferable. 

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